India's motor bill may overtake state regulations for cab aggregators like Ola, Uber

India's central guidelines for cab aggregators, which came in December 2016, are said to be progressive and aggregator-friendly with an allowance of surge pricing up to three times the minimum fare, among other aspects.Varsha Bansal | ET Bureau | March 23, 2017, 06:47 IST

Tamil Nadu may be the latest one to join the group of states which have formulated regulations for app-based cab aggregators like Ola and Uber, but an air of uncertainty hangs over whether the Centre's regulation will supersede those of the respective states.

Uncertainties like this are expected to be addressed if the Motor Vehicles (Amendment) Bill, 2016, which is currently tabled in Parliament, is taken up for discussion in the coming days.

There's a specific clause in the bill which states that while issuing a licence to the aggregator, the state government 'shall' take into account the guidelines released by the Ministry of Road Transport and Highways, according to players in the space.

This means that if the bill is passed without any changes, the central regulations will supersede state regulations, resulting in the state governments following the central guidelines, as per experts tracking this space.

Central guidelines for cab aggregators, which came in December 2016, are said to be progressive and aggregator-friendly with an allowance of surge pricing up to three times the minimum fare, among other aspects.

“The central guidelines are aggregator-friendly,“ said Nilesh Sangoi, chief executive of Meru Cabs, “The state regulations are more balanced wherein they take into account the interest of various stakeholders and not just the aggregators.“

Karnataka, West Bengal, Delhi-NCR and Maharashtra have come up with regulations for app-based cab-aggregators, although not many have been able to implement the regulations completely. Both Ola and Uber have licences in Karnataka, with Ola being the first cab-aggregator in India to obtain the licence. Ola did not respond to queries sent by ET.

“Various states are unclear about what is going to happen with respect to the central guidelines and are waiting for some clarity to decide on their respective state regu lations for cab aggregators,“ said an expert tracking this space, requesting anonymity .

According to Uber, the central guidelines have developed a broad framework for promoting urban mobility. “They essentially lay down regulatory principles that can guide state governments in framing their individual guidelines,“ said Shweta Rajpal Kohli, head of Public Policy for Uber India and South Asia. “While states are empowered to set their own rules, given the extensive consultative process and involvement of state governments in formulating the central guidelines, their relevance is hard to miss.“

Experts tracking the transportation sector believe the various city policies and central guidelines are quite different in nature.

“For example, tourist vehicles can't operate as per city regulations, but national guidelines permit it; surge pricing is not allowed as per city rules, but national guidelines permit it up to three times the minimum fare. With respect to liability, the city-level policy is quite harsh, whereas the national guidelines don't hold the company liable,“ said Jaspal Singh of Valoriser Consultants, which tracks the transportation space in India.